Palbociclib

Among post-menopausal women with advanced breast cancer, ER+, HER2- is the largest sub-group, representing approximately 60 percent of all cases. Despite currently available treatments, survival prospects in this category of metastatic breast cancer patients remain poor.

ER+ (estrogen receptor-positive) means that the cancer cells have a receptor protein that binds the hormone estrogen. ER+ cancer cells may need estrogen to grow, and may stop growing or die when treated with substances that block the binding and actions of estrogen.

HER2- (HER2 negative) means that the breast cancer doesn't have high levels of the protein HER2, as opposed to some cancers, where the cells that have a higher-than-normal level of it. High level of HER2 stimulates cancer growth.

In many cancers, a tumor-suppressor protein called retinoblastoma is deactivated due to an increase in the activity of the proteins CDK 4 and 6. The result is unchecked cell proliferation.

The inhibitor is designed to shut down retinoblastoma phosphorylation, which drives cell division. Inhibition of CDK 4/6 prevents DNA synthesis and shuts down cell division.

If approved, palbociclib, would be a first-in-class CDK inhibitor.

Other CDK inhibitors, like CDK 2 or CDK 9, have been studied for a long time, but 4 and 6 are the first ones that actually work in the clinic. Palbociclib has shown such benefits that there are now other CDK 4/6 inhibitors being developed.

Paloma-1

In a Phase II study called Paloma-1, palbociclib was tested in combination with Novartis' (NYSE:NVS) Femara, an approved drug, versus Femara alone. The purpose of the trial was to improve treatment of women with estrogen receptor-positive, HER2-negative advanced breast cancer.

In the trial, 165 patients were randomized 1:1 to receive Femara alone, or in combination with palbociclib.

The idea of combining the two drugs originates from an observation in 2012.

The PFS was nearly tripling (11.0 versus 4.1 months), and the results were regarded as practice-changing in medical circles. From this came the idea that adding different targeted agents to early hormone therapy may lead to good results.

And so, Pfizer's palbociclib was tried. The majority of patients enrolled in the palbociclib trials are very sick, suffering from an aggressive metastatic disease, so the success with that group is even more significant.

The addition of palbociclib to Femara improved the PFS in all sub-groups.

Femara by itself is providing patients with additional 7.5 months of PFS, while the combination of palbociclib and Femara more than tripled that level to a median PFS of 26.1 months. This is considered a dramatic result in the business.

Femara is a hormonal therapy.

In women who have had their menopause, the main source of estrogen is through the conversion of androgens (sex hormones produced by the adrenal glands) into estrogens. This is carried out by an enzyme called aromatase.

Femara blocks the process of aromatisation, and so, reduces the amount of estrogen in the body. As less estrogen reaches the cancer cells, they grow more slowly or stop growing altogether.

The Phase II study is currently replicated in a large Phase III registrational trial that will hopefully lead to the approval of this drug, if the results are repeated.

Pfizer said in January that it could file palbociclib with the FDA after Phase II analysis, an action depending on the FDA's acceptance.

The company said it was encouraged by the magnitude of the Phase II data.

Phase IIItrials

One of the trials, Paloma-2, will again combine palbociclib with Femara.

Another study, Paloma-3 is combining palbociclib with AstraZeneca's (NYSE:AZN) Faslodex versus Faslodex plus placebo. Patients in these trials have been previously treated with hormone therapy, but the cancer has since progressed.

In addition, investigator-led studies are going on.

One of these is Penelope-B, a Phase III study comparing palbociclib plus standard hormone therapy to placebo plus standard hormone therapy. The trial is sponsored by the German Breast Group.

The Penelope-B study is designed to demonstrate that in the background of standard anti-hormonal therapy, palbociclib provides superior invasive disease-free survival compared to placebo.

Considering the high risk of recurrence of the disease after chemotherapy, this is an important aspect.

Estrogen

Estrogen and/or progesterone are female hormones produced in the body. Some breast cancer cells grow with the help of these hormones. The cancer cells contain hormone receptors, and when the hormones attach to the receptors, the cancer cells grow.

To determine the hormone receptor status of a patient is an important factor in deciding which way to go with the treatment. A pathologist determines the status by testing the tumor tissue from a biopsy.

Hormone receptor-positive breast cancers can be treated with hormone therapies. Some drugs, like tamoxifen, attach to hormone receptors inside the cancer cells and block estrogen from getting attached to the receptors.

Other therapies, like aromatase inhibitors, lower the level of estrogen in the body so the cancer cells cannot get enough estrogen that they need. Aromatase inhibitors include Arimidex from AstraZeneca, Femara from Novartis or Aromasin made by Pfizer.

Hormone therapy is only helpful for hormone receptor-positive breast cancers, but it does not help patients whose tumors are hormone receptor-negative, because they have no hormone receptors to interfere with.

About 2 out of 3 of breast cancers are hormone receptor-positive.

Competition

Novartis: LEE011, Novartis' compound is claimed by Novartis researchers as a best-in-class contender as a result of the improved science behind it. According to Dr William Sellers, a Novartis executive, LEE011 is the most selective CDK4/6 inhibitor to date.

The compound is currently in a Phase III study with an estimated 500 patients.

Astex Pharmaceuticals, a small company that has since been acquired by Otsuka Pharmaceutical, was Novartis' partner in developing the drug.

Eli Lilly: Further behind in the race is Eli Lilly (NYSE:LLY) with its own CDK4/6 compound called LY2835219.

Eli Lilly's research lab president, Jan Lundberg noted during his company's January 30 conference call that there is a differentiating factor between Lilly's and Pfizer's compound to Lilly's advantage. Lilly may be able to claim a "potential efficacy benefit," because its drug can applied by continuous dosing due to a milder adverse effect profile, whereas Pfizer's treatment should require intermittent dosing.

However, Lilly's drug is in Phase I, as opposed to both Pfizer and Novartis that are running Phase III trials.

Markets

The HR+ breast cancer market is about three times the size of the HER 2+ setting, from which Herceptin, a blockbuster drug sold by Roche (OTCQX:RHHBY) generates most of its approximately $6 billion in annual sales.

Pfizer is also looking at opportunities beyond breast cancer, specifically in melanoma, squamous cell carcinoma, head and neck cancer, lung, esophagus and some hematological cancers, but these are mid- to long-term opportunities.

An estimated 232,000 new cases of invasive breast cancer were diagnosed among women in the U.S. during 2013. Excluding cancers of the skin, breast cancer is the most frequently diagnosed cancer in women.

Palbociclib could possibly be appropriate for over 200,000 breast cancer patients in developed markets alone.

Investors' summary

Under CEO Ian Read, Pfizer has cut costs and become more selective in the company's investment choices. Investors have also been watching for a potential breakup of Pfizer for the past two years.

The sale of the nutritional business and the spin-off of the animal health unit, now called Zoetis (NYSE:ZTS), seem like steps taken in that direction. Also, last year, the company was reorganized into three units, drugs that treat pain and inflammatory diseases; drugs for cancer and vaccines; and products that have lost patent protection.

Pfizer insists that no big transaction is possible before 2017, since three years of audited financial information is required to enter into a transaction like a partial IPO, or a spin or split.

Pfizer also emphasized that cancer-fighting drugs are now a priority for the company.

The first wave of cancer drugs included Xalkori, Inlyta and Bosulif. Palbociclib is a bright star in the second wave. Late-stage studies are now underway, and some analysts predict Pfizer may be able to file with the FDA by spring and receive regulatory approval by year-end.

Pfizer also has a PI3K/mTOR inhibitor for endometrial cancer (PF-05212384) and a hedgehog inhibitor (PF-04449913) for hematologic malignancies.

If just one of these becomes a blockbuster, bringing in billions of dollars in sales, it would go a long way to make up for the loss of the Lipitor sales.

At 13.68 times 2015 earnings estimates, Pfizer is one of the cheapest drug-makers in the S&P 500 index.

In 2014, the company expects to earn between $2.20 and $2.30 a share on revenue of $49.2 billion to $51.2 billion. It has said it would repurchase $5 billion in stock.

Analysts, meanwhile, are looking for future blockbusters.

Pfizer is developing experimental drugs targeting a number of chronic diseases. It has begun late-stage trials on bococizumab, a drug that lowers bad cholesterol by blocking a protein called PCSK9. It's working with Eli Lilly to develop a new kind of pain medication called tanezumab, and has joined Merck (NYSE:MRK) to develop a diabetes drug, ertugliflozin.

And with palbociclib, Pfizer may finally have the kind of success that Wall Street and patient investors has been waiting for.

Pfizer has had its fair share of disappointments in the past when it comes to delivering new drugs. Should something bad happen to palbociclib on the way to success, Pfizer's stock will suffer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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